Mergers & Acquisitions

EG Group Selling U.K. C-Store Business to Zuber Issa, Getting Sole CEO

Mohsin Issa will continue to lead business along with new CFO
eg group
Photograph courtesy of EG Group

Global retailer EG Group Ltd., the parent company of EG America LLC, has reached an agreement to sell its more than 550-unit U.K. convenience-store and gas station business to co-founder Zuber Issa for $290.117 million, EG Group said in a trading update for its first-quarter 2024.

On completion of the transaction, Zuber Issa will step down as co-CEO of EG Group, with his brother, co-CEO Mohsin Issa, continuing to lead the business as sole CEO. Zuber Issa will retain his existing shareholding in the company and remain on the board as a nonexecutive director.

TDR Capital, a London-based private equity firm, has agreed to acquire Zuber Issa’s shares in U.K. supermarket and gas station retailer Asda. Mohsin Issa remains a co-owner in Asda alongside TDR Capital. This brings the ownership of Asda to 67.5% by TDR Capital, 22.5% by Mohsin Issa and 10% by Walmart Inc. TDR Capital invested in Asda with the Issa brothers, and together they took majority ownership of the business in 2021.

TDR Capital LLP and Mohsin Issa’s shareholdings in EG Group remain unchanged following the deal with Zuber Issa.

“We are pleased to reach an agreement for the divestment of our remaining U.K. forecourt business and as we work towards completion, the focus on our key growth opportunities remains unchanged, and we are confident that EG Group is well placed to deliver further success in the future,” the Issas said. “We have had an amazing journey together building EG Group over the last 20 years, and we both look forward to continuing to work closely together as fellow board members and shareholders in EG Group.”

The company will use the proceeds from the divestment to repay debt, further strengthening its balance sheet, it said.

Founded in 2001 by the Issa family, Blackburn, United Kingdom-based EG Group is a gasoline forecourt and retail convenience operator with more than 6,200 sites across the United Kingdom and Ireland, Europe, the United States and Australia. In 2018, EG Group established itself in the United States as EG America by acquiring Kroger’s 762-site c-store network, which included the Turkey Hill, Loaf 'N Jug, Kwik Shop, Tom Thumb and Quik Stop banners. It acquired TravelCenters of America’s Minit Mart convenience-store business in 2018. The portfolio included 225 c-stores. And in 2019, among other acquisitions, EG Group acquired Cumberland Farms and its nearly 660 c-stores in the Northeast and Florida.

  • EG America is No. 5 on CSP’s 2024 Top 40 Update to the 2023 Top 202 ranking of U.S. c-store chains by store count. Watch for the full 2024 Top 202 ranking in the June issue of CSP magazine and in CSP Daily News.

EG Group has also appointed Russell Colaco as group CFO, succeeding Michael Bradley who will step down to pursue other opportunities. Colaco’s appointment reflects the continued evolution of the business and the relative size and importance of the U.S. business.

“We are delighted to announce that Russell Colaco is joining as our new global chief financial officer, bringing significant international CFO experience, including in the U.S., our biggest market,” the Issas said. “We’d like to thank Michael Bradley for his contribution including his key role in our successful refinancing and in the sale of the majority of our UK business to Asda.”

Colaco was most recently CFO at Foster Farms LLC, a $3 billion food company. His foodservice and grocery experience includes two years at Campbell Soup as corporate development officer, preceded by four years at JBS, a producer of protein-based food production, where he served as CFO of JBS Foods International. He also has significant mergers-and-acquisitions experience following nine years at Morgan Stanley, where he provided financial and strategic advisory services to clients in the consumer and retail sector.

U.S. Blueprint

“EG Group delivered a good trading performance and further strategic progress in the first quarter of the year. Group underlying [earnings before interest, taxes, depreciation and amortization (EBITDA)] increased by 9% in the quarter, and the U.S. and Europe delivered standout performances, as we have started to see the benefit from the recently implemented growth initiatives to strengthen the core business,” Zuber Issa and Mohsin Issa said.

“Our U.S. strategy provides a blueprint for the Group's global initiatives to improve performance organically. The group also delivered further progress with its deleveraging program over the quarter, supported post the period end by completing our sale of 216 KFC franchise restaurants to Yum! Brands’ KFC Division and agreeing to divest the group’s remaining UK forecourt business. We remain committed to further reducing leverage to put in place a sustainable long-term capital structure.”

From a geographical perspective, EG Group’s key regions of the United States and Europe both made strong progress against the group’s strategic objectives.

With 1,565 sites in the United States, EG Group continued to make good progress against its strategy to improve performance organically. Under the leadership of EG America CEO and President John Carey, the company is focusing growth initiatives on four key areas: product offer, fuel, customer engagement and operating efficiencies.

EG Group has seen success in its coffee and dispensed beverage initiatives in the United States in the quarter, it said, which contributed to growth in grocery and merchandise earnings.

Other U.S. initiatives include enhancing fuel volumes through investment in growing segments, such as diesel and B2B, and a focus on a premium offering; augmented engagement with EG’s active customer base through loyalty and rewards while partnering with suppliers; and a continued focus on cost-reduction measures.

These earnings growth initiatives helped to drive 6.8% growth in U.S. EBITDA in the first quarter, further supported by growth in U.S. fuel volumes, which outperformed the market.

In the first quarter, underlying EBITDA grew by 15.9% in Europe, where EG Group has operations in 3,576 sites, including in Germany, France, Italy, Benelux and the U.K. and Ireland. This was driven by a strong performance in Germany, where fuel performance significantly improved in the first quarter, supported by new contract terms.

In addition, Europe delivered a good performance in grocery and merchandise, reflecting a continued focus on product mix, pricing optimization and new sites maturing across the region.

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